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Joint Liability Lending in Microcredit Markets with Adverse Selection: a Survey

Alessandro Fedele ()

No 20060901, Working Papers from Università degli Studi di Milano-Bicocca, Dipartimento di Statistica

Abstract: This paper reviews recent literature on joint liability lending in microcredit markets characterized by adverse selection. This mode of lending consists of granting individual loans to wealthless borrowers provided that they form groups: if a group does not fully repay its obligations, then the microlender cut off all members from future credit until the debt is repaid. Joint liability lending is able to extract information through a peer selection mechanism, with the effect of raising both repayment rates and welfare with respect to individual lending.

Keywords: microcredit; underdeveloped economies; joint liability lending. (search for similar items in EconPapers)
JEL-codes: D82 L31 O12 O16 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2006-09, Revised 2006-09
New Economics Papers: this item is included in nep-dev, nep-fmk and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

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Related works:
Journal Article: JOINT LIABILITY LENDING IN MICROCREDIT MARKETS WITH ADVERSE SELECTION: A SURVEY (2006)
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